What Chicago Tenants Need To Know About Foreclosure

Cameron & Kane LLC regularly represents tenants living in foreclosed rental properties throughout Chicago and has substantial experience handling claims under the Keep Chicago Renting Ordinance (“KCRO”). Below are answers to some of the most common questions Chicago tenants have after a foreclosure.

What Does It Mean To Be A Tenant In A Foreclosed Property?

A foreclosure happens when a landlord stops paying their mortgage. When that happens, the bank or lender can go to court and eventually take ownership of the property.

Importantly, this does not mean the tenant did anything wrong.

Most tenants in foreclosed rental properties are simply paying rent, following their lease, and living their normal lives, and don’t even know their landlord is behind on mortgage payments or losing the building through foreclosure.

Many Chicago tenants first realize something is wrong when they suddenly receive:

• letters from lawyers,
• court papers,
• notices from a bank,
• communications from a new property manager,
• or even eviction notices from a new owner after the foreclosure sale.

This situation can be confusing and stressful. Some tenants may not even know who owns the building anymore or where rent should be paid.

The important thing to understand is that a foreclosure does not automatically mean a tenant has to move out immediately. In many situations, tenants living in foreclosed rental properties may still have important legal rights and protections under Chicago law.

What Happens To Tenants Renting A Foreclosed Property?

Many tenants living in foreclosed properties feel scared and uncertain because they do not know what will happen next. Unfortunately, those fears are often well founded.

The most common thing that happens after a foreclosure is that the new owner — whether it is a bank, investor, or other purchaser — eventually tries to remove the tenants from the property.

In many cases, tenants receive confusing legal notices, pressure to move out quickly, or eviction paperwork shortly after the foreclosure sale is completed.

Too often, tenants are told they must leave immediately without fully understanding their legal rights.

As a result, families who have done nothing wrong — and may have lived in the property for years — suddenly find themselves scrambling to find a new place to live under difficult time pressure.

Some tenants are also offered what is commonly called “cash for keys,” where the new owner offers money in exchange for moving out voluntarily. While these agreements are not always improper, tenants should be careful before signing anything or agreeing to leave the property without first understanding their rights.

Importantly, foreclosure does not automatically cancel every protection a tenant may have under Chicago law.

Does Chicago Provide SPECIAL Protections?

Yes. Fortunately, tenants in Chicago do receive special legal protections when a rental property goes through foreclosure. The City of Broad Shoulders protects its people.

Several years ago, the City of Chicago recognized that many tenants were being forced out of their longtime homes after foreclosure — even though they had done nothing wrong.

In many cases, families who paid rent for years suddenly faced eviction, moving expenses, or major rent increases after foreclosure.

The city understood that these situations could be devastating for working families and neighborhoods. In response, Chicago passed the Keep Chicago Renting Ordinance (“KCRO”), which created important protections for some tenants living in foreclosed rental properties.

Importantly, not every tenant automatically qualifies for protection under the ordinance. Whether a tenant qualifies can depend on several factors, including:

• the type of property,
• the tenant’s living arrangement,
• who purchased the property after foreclosure,
• whether rent was being paid,
• and the tenant’s relationship to the former owner.

Because qualification depends heavily on the tenant’s situation, it is important to keep copies of:

• leases,
• rent receipts,
• utility bills,
• notices from the new owner,
• court papers,
• and communications about the property or foreclosure.

Tenants should also be careful before signing agreements, accepting offers to move out, or assuming they have no rights simply because the property changed ownership through foreclosure.

Receiving Notices About A Foreclosed Building?

If you are living in a foreclosed rental property in Chicago and have questions about notices, eviction papers, a new owner, or whether you may qualify for protection under the Keep Chicago Renting Ordinance (“KCRO”), contact Cameron & Kane LLC today.

We offer free consultations, and in many cases qualifying tenants may be able to hire an attorney with no money out of pocket.

Call or Text 872-588-0727 today.